Buying Advice Item for sale not on lot, in owners garage

[dgeesaman]

I'm considering buying a used commercial mower from a local dealer. It has the engine, configuration, hours, and condition I'm looking for. The problem seems to be that while I can see it listed on a major internet classifieds site, it's not kept on their lot and not shown on their website.

I stopped in to check it out and it was off-site, where they took me (rather than move the equipment) and it seems the ownership of the dealer is enjoying keeping this unit at least for a while. The price is not ridiculous but certainly not priced to move. When I asked about some points that related to making an offer they weren't keen to negotiate and part of their reasoning is that they aren't in a hurry to sell it, wouldn't be upset if they didn't sell it, and don't mind putting some more personal-use hours on it until it's sold.

On one hand, it's their business, their inventory, their decision. On the other hand, this smells a bit fishy - how long is a dealer allowed to demo equipment for themselves and hide it from their customers? With the personal use, does there come a point where they need to buy it from the business (and pay the sales tax and take it off their inventory)?

David

 

[rtimgray]

My guess would be if it is either the owner or with the consent of the owner, they could keep any piece of (used) equipment that they wanted to for however long they wanted to. I would imagine it might depend on if the dealership is more of a small business or a larger corporation as well.

Good luck and take care.

 

[JimRB]

It is not fishy. You did not make an offer that causes them to release the item to you. Same as if you did not meet their price on a shiny new piece of equipment they have at their main showroom. It is their business and they can run it as they see fit. There was a piece of equipment sitting in the weeds of the local dealership. The owner said he was holding it for someone. He had all kinds of stuff sitting in the weeds. Storing inventory in the weeds seems like an odd way to market stuff and not all the equipment was used. Owner died and the heirs continued running the business. They sold me the old used scrape blade. Short story is the old man ran the business one way, the next generation a bit different. The next generation also recycled most of the shipping frames and old mangled equipment, cut the weeds and filled in the ditch.

I doubt the owners are worrying about the tax liabilities and I doubt they really need to worry about it.

 

[trktrman]

I agree. They can keep used equipment as long as they want and use it as much as they want. It's still for sale so what could the problem be?
It doesn't sound like you'll get a really good deal on that particular machine though.

 

[dgeesaman]

I don't want to give these guys a hard time but I am trying to understand at what point they might become motivated to sell.

Sounds like I should become a used equipment seller. I can use the equipment all I want and not have to pay sales tax on it!

 

[Ted Summey]

You may have been looking at an "Internet special" designed to get traffic into their business. Then once you see the special or find out there are strings attached, you look at the new stuff. Not exactly bait and switch - but awfully darn close. When looking for cars for my kids, I saw a couple of them. One sales guy even said "Well the Internet special got you in here."

 

[Gator6x4]

I don't see a problem. Why is it necessary for them to have the mower on site, setting outside. It is now in a garage. What is the difference in where you look at the equipment? What is the real reason you feel the dealer should have the mower at the business, setting outside not at his home in his garage.

Now if the dealer failed to show the equipment or give you his selling price, that would give one reasons to have concerns.

 

[dgeesaman]

You may have been looking at an "Internet special" designed to get traffic into their business. Then once you see the special or find out there are strings attached, you look at the new stuff. Not exactly bait and switch - but awfully darn close. When looking for cars for my kids, I saw a couple of them. One sales guy even said "Well the Internet special got you in here."

While that's certainly a good theory, I don't think it applied here. They didn't have it listed on their website or their local farm news full-page ad, suggesting the weren't expecting anyone to find it. They said I was the only one who asked about it.

I think it's as simple as that it's a nice machine, of a brand they don't typically carry, and so they added it to their inventory in semi-secret so that the owners could play with it as long as they wanted to without having to actually buy it.

David

 

[GManBart]

While that's certainly a good theory, I don't think it applied here. They didn't have it listed on their website or their local farm news full-page ad, suggesting the weren't expecting anyone to find it. They said I was the only one who asked about it.

I think it's as simple as that it's a nice machine, of a brand they don't typically carry, and so they added it to their inventory in semi-secret so that the owners could play with it as long as they wanted to without having to actually buy it.

David

How would they add it to their inventory if they didn't buy it? If it belongs to a third-party, then it's between them and the third-party to agree on their efforts to sell it.

 

[DavesTractor]

I don't want to give these guys a hard time but I am trying to understand at what point they might become motivated to sell.

Sounds like I should become a used equipment seller. I can use the equipment all I want and not have to pay sales tax on it!

In most states where there is sales tax there is also use tax. If a dealer demo's the mower or tests it or whatever he should be fine. But when it is truly acquired to be used with a just a secondary thought of selling it, he most likely owes "use tax" on the item to the state. Just like if we buy a forklift to sell and then decide to keep it for our use, we have to report and pay use tax as it becomes an asset and not inventory.

It seems like the tax issue is between him and his accountant and his taxing agency. And you really don't know if he has already paid use tax on it. I know it is unlikely, but it is possible. So this sort of question is interesting, but as a buyer it will not be a good negotiation tool and really isn't your place to try to tell him about his tax implications unless of course you work for a taxing agency...and then I guess it would be your place!

You might ask the owner how long he plans to demo the unit and at what point he would sell it for a great price. He may be happy to demo a new unit each year, put a few hours on it and sell it at or near cost. He then gets a new mower each year and it costs him nothing.

And yes you should become an equipment dealer, it's sort of fun having all of this inventory at hand. Like a big toy store for grown men. That is until you pay payroll, taxes, rent, etc. That takes away part of the fun, but it is still a great job